PNM Resources Inc (PNM)

Short-term

Turnover ratios

PNM Resources Inc's activity ratios reflect the efficiency of the company's operations in managing its inventory, receivables, and payables.

- Inventory turnover has shown a fluctuating trend over the years, with a high of 17.01 in 2022 and a low of 7.13 in 2019. The decreasing trend from 2022 to 2023 could indicate potential issues with managing inventory levels efficiently.

- Receivables turnover has also fluctuated, ranging from 7.09 in 2023 to 9.09 in 2019. The company has managed to collect its receivables fairly consistently, indicating a good relationship with customers in terms of collecting payments.

- Payables turnover has shown variability, with a range from 3.46 in 2020 to 5.39 in 2019. A higher payables turnover ratio indicates that the company is paying its suppliers more frequently, which could indicate a strong liquidity position or effective management of payables.

- The data for working capital turnover is missing, so it's not possible to analyze how efficiently the company is utilizing its working capital to generate sales.

Overall, PNM Resources Inc's activity ratios suggest a mixed performance in managing its operational assets and liabilities effectively. Further analysis of industry benchmarks and trends would provide more context for evaluating the company's operational efficiency.

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Average number of days

The activity ratios of PNM Resources Inc provide insight into the efficiency of the company's operations in managing its inventory, receivables, and payables.

1. Days of inventory on hand (DOH):
- The days of inventory on hand indicate how long, on average, it takes for the company to sell its inventory. A lower DOH is generally preferred as it signifies that inventory is being managed efficiently.
- PNM Resources Inc's DOH has fluctuated over the past five years, from a low of 21.45 days in 2022 to a high of 51.22 days in 2019. The increase in 2023 compared to 2022 suggests a slower turnover of inventory.

2. Days of sales outstanding (DSO):
- The days of sales outstanding measure the average number of days it takes for the company to collect on its credit sales. A lower DSO indicates a faster collection of receivables and better liquidity.
- PNM Resources Inc's DSO has varied over the years, with a peak of 51.49 days in 2023 and a low of 40.17 days in 2019. The increase in 2023 compared to 2022 suggests a longer collection period for receivables.

3. Number of days of payables:
- The number of days of payables measures how long the company takes to pay its suppliers. A higher number of days indicates that the company is taking longer to pay its bills, potentially benefiting from extended credit terms.
- PNM Resources Inc's number of days of payables has been inconsistent, with a significant increase in 2020 to 105.60 days before decreasing again in subsequent years. The decrease in 2023 compared to 2022 suggests the company is paying its payables more promptly.

Overall, the analysis of PNM Resources Inc's activity ratios indicates fluctuations in the efficiency of managing inventory, collecting receivables, and paying payables over the past five years. Further investigation into the underlying factors driving these changes could provide valuable insights into the company's operational performance and potential areas for improvement.

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Long-term

The fixed asset turnover ratio for PNM Resources Inc has been on a declining trend from 0.32 in 2022 to 0.25 in 2023. This indicates that the company generated 0.25 times in revenue for every dollar invested in fixed assets in 2023, compared to 0.32 times in the previous year. Although the ratio fluctuated slightly over the years, it stayed relatively low, suggesting that the company may not be efficiently utilizing its fixed assets to generate sales.

On the other hand, the total asset turnover ratio for PNM Resources Inc also followed a decreasing trend, declining from 0.24 in 2022 to 0.19 in 2023. This highlights that the company generated 0.19 times in revenue for every dollar invested in total assets in 2023. The declining trend in total asset turnover indicates that PNM Resources Inc may be facing challenges in generating revenue efficiently relative to its total asset base.

Overall, the decreasing trends in both fixed asset turnover and total asset turnover ratios suggest that PNM Resources Inc may need to focus on improving its asset utilization efficiency to enhance its long-term operational performance and profitability.